£1bn sporting gamble starts to pay off for BT

BT's massive investment in its new sports channel is already paying off, it said yesterday as revenues stopped falling for the first time in four years.

Britain's biggest phone company is spending £1bn over three years for rights to sports events and the take-over of ESPN. That is a huge gamble on sport attracting and retaining customers for its broadband services.

Gavin Patterson, who took over as chief executive last month, said: "BT Sport has made a very confident start. It passed the two million direct customers mark a couple of weeks ago and including cable customers is now more than four million.

"What we will be judged on is the halo effect it has and that is already showing in today's figures." Mr Patterson pointed out that BT captured 93 per cent of all the new people signing up for broadband in the three months to September, saw the lowest number of customers giving up landlines for five years, and the rise of 4 per cent in its consumer revenues was the best growth in a decade.

Overall BT revenues for the quarter were flat at £4.49bn but pre-tax profits came in 2 per cent ahead at £609m. Most analysts had been expecting them to fall because of the costs of BT Sport, which started broadcasting in August amid heavy publicity. The quarterly cost for sports rights was £140m higher than the expected £100m.

Mr Patterson said: "It is early days so we should not get carried away and there will be bumps in the road ahead. But to have over four million customers in just 14 weeks is pretty good. To use a football analogy, if you had offered me this position and this number of points at the start of the season I'd have taken them happily."

The most watched Premier League game on BT Sport was Crystal Palace versus Arsenal. It drew in an average audience of 913,000, which is higher than any gained by predecessors Setanta and ESPN. Rugby has also proved a success with last weekend's Wasps versus Leicester Tigers, which managed to attract a peak audience of 357,000.

BT gained 156,000 broadband customers in the three months, almost double the 81,000 it gained in the same quarter last year. That was a record 93 per cent of the total which, given that Sky has already announced it gained 111,000 new broadband customers, left analysts asking whether TalkTalk could have lost almost 100,000 broadband customers. TalkTalk's shares were down by more than 3 per cent while BT's rose 7.5p to 377p.

Mr Patterson said BT had countered the bill for BT Sport by cutting operating costs in the rest of the group.

The numbers add up

4 per cent BT Sport's total number of customers, including cable.

4m Its rise in consumer revenues, the company's best in a decade.